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  • The consequences of Romney’s proposed minimum wage hike

    The consequences of Romney’s proposed minimum wage hike

    By Daniel Hamermesh
    Published: Feb. 9, 2012

    Economics Professor Daniel Hamermesh explains why the minimum wage generates more heat relative to its importance than any other social or economic policy.

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    • Quote 2
      Jeff said on Aug. 31, 2012 at 2:36 a.m.
      The minimum wage is an interesting topic in that liberal and conservative bases have switched arguments a little bit. Not because they haven't been true to their ideologies, but because the topic plays both sides of the fence in subtle ways. Conservatives like to argue that liberals should like reducing minimum wage because more people can get jobs. Liberals for the most part miss a chance to argue that conservatives should like minimum wage because it skews the labor market in ways that actually make companies more efficient. Companies who would have 5 8 dollar workers might only have 3 10 dollar workers plus a new labor saving device to push output up for those three employees. Saving 20 dollars an hour might make something economical that saving 16 dollars an hour wouldn't. And the people making the labor saving device are probably paid enough that minimum wage doesn't matter. If Nike were forced as a condition for product import, to pay every employee worldwide at least $1.50 an hour, then you can bet they would find a way to increase the number of shoes each employee currently making $2 to work a long 12 hours produces. Of course there would be a lot of people out of work because of this, but the argument is that they would find something else to do. The important thing is that massive amounts of labor that was wasted in some extremely inefficient activity has been freed up to do something more productive. Of course, if it is wrong when a liberal makes it to a conservative, then it also has to be wrong if a conservative makes it to a liberal... Perhaps they could put "Peg and Awl" from 1928 on the Radio as they make the transition. I would suggest you can't take arguments like this at face value, but have to look at them in terms of what is actually going on in the economy at the time the changes are made. What is good in a strong labor market can be bad in a week labor market and vice versa. This is probably the strongest argument a liberal has against free traders. Market interference can't possibly be wrong in *both* directions. Actually it can, but not very often as it requires a spectacularly balanced economy. Once you admit that the economy is stronger after you move in one direction than it is if you move in the opposite way, then you also have to admit that studying the world has power and you don't want to be the one arguing before a scientific committee that we were all put on the correct path by our higher power.
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